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Select Topics
Relevant legislation and authorities
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  1. Is a merger control regulation in force?
  1. Which authorities enforce the merger control regulation?
  1. Relevant regulations and guidelines with links:
  1. Does general competition regulation apply to mergers or ancillary restrictions?
  1. May an authority order a split-up of a business irrespective of a merger?
  1. Other authorities that also require merger filing or may prohibit transaction
    (Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)
  1. Are any parts of the territory exempted or covered by particular regulation?
Voluntary or mandatory filing
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  1. Is merger filing mandatory or voluntary?
Types of transactions to file – what constitutes a merger
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  1. Is there a general definition of transactions subject to merger control?
  1. Is "change of control" of a business required?
  1. How is "control" defined?
  1. Acquisition of a minority interest
  1. Joint ventures/joint control – which transactions constitute mergers?
Thresholds that decide whether a merger notification must be filed
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  1. Which thresholds decide whether a merger notification must be filed?
  1. Special thresholds for particular businesses
  1. Rules on calculation and geographical allocation of turnover
  1. Special rules on calculation of turnover for particular businesses
  1. Series of transactions that must be treated as one transaction
Exempted transactions and industries (no merger control even if thresholds ARE met)
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  1. Temporary change of control
  1. Special industries, owners or types of transactions
  1. Transactions involving only foreign businesses (foreign-to-foreign)
  1. No overlap of activities of the parties
  1. Other exemptions from notification duty even if thresholds ARE met?
Merger control even if thresholds are NOT met
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  1. May a merging party file voluntarily even if the thresholds are not exceeded?
  1. May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?
Referral to and from other authorities
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  1. Referral within the jurisdiction
  1. Referral from another jurisdiction
  1. Referral to another jurisdiction
  1. May the merging parties request or oppose a referral decision?
Filing requirements and fees
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  1. Stage of transaction when notification must be filed
  1. Pre-notification consultations
  1. Special rules for acquisitions on stock exchanges and public takeover bids
  1. Forms available for completing a notification
  1. Languages that may be applied in notifications and communication
  1. Documents that must be supplied with notification
  1. Filing fees
Implementation of merger before approval – "gun jumping" and "carve out"
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  1. Is implementation of the merger before approval prohibited?
  1. May the parties get permission to implement before approval?
  1. Due diligence and other preparatory steps
  1. Veto rights before closing and “Ordinary course of business” clauses
  1. Implementation outside the jurisdiction before approval – "Carve out"
  1. Consequences of implementing without approval/permission
The process – phases and deadlines
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  1. Phases and deadlines
Assessment and remedies/decisions
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  1. Tests or criteria applied when a merger is assessed
  1. May any non-competition issues be considered?
  1. Special tests or criteria applicable for joint ventures
  1. Decisions and remedies/commitments available
Publicity and access to the file
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  1. How and when will details about the merger be published?
  1. Access to the file for the merging parties and third parties
Judicial review
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  1. Who can appeal and what may be appealed?

 
China

Mr. Jiang Liyong

jiangliyong@gaopenglaw.com

Tel: (86 10) 59241188

Mob: (86) 13522798124

Fax: (86 10) 59241199

Office: Beijing

No new regulation adopted or proposed

Note that relevant regulations may be changed before your contemplated transaction is completed. Mergerfilers.com and our national experts keep information on regulations up to date and even provide alerts on adopted or proposed changes that have not come into force yet but may come into effect before the transaction is completed. When this field is green, we have no knowledge of such imminent changes to the relevant regulations.

Relevant legislation and authorities

1) Is a merger control regulation in force?

Yes. Merger control regulation was introduced in Part 4 of the Anti-monopoly Law of the People's Republic of China (“AML”) in 2008.

2) Which authorities enforce the merger control regulation?

The State Administration for Market Regulation (“SAMR”) enforces the AML including the merger regulation contained therein. 

3) Relevant regulations and guidelines with links:

The merger regulation is contained in Part 4 of the AML. More detailed rules can be found in various regulations, decrees and guidelines. Links to the relevant regulations, decrees, guidelines and forms are listed here:

Original Chinese version

Unofficial English translation

中华人民共和国反垄断法

Anti-monopoly Law of the People’s Republic of China

国务院关于经营者集中申报标准的规定

Provisions of the State Council on Thresholds for Prior Notification of Concentrations of Undertakings

金融业经营者集中申报营业额计算办法

Measures for the Computation of Turnover for Declaration of the Concentration of Undertakings in the Financial Sector (Translation into English not available from the SAMR)

国务院反垄断委员会关于相关市场界定的指南

Guidelines of the Anti-monopoly Commission of the State Council on the Definition of a Relevant Market (Translation into English not available from the SAMR)

关于经营者集中申报文件资料的指导意见

Guiding Opinions on Declaration Documents for Concentrations of Undertakings (Translation into English not available from the SAMR)

经营者集中申报办法

Measures for the Declaration of Concentration of Undertakings (Translation into English not available from the SAMR)

经营者集中审查办法

Measures for the Review of Concentration of Undertakings (Translation into English not available from the SAMR)

关于规范经营者集中案件申报名称的指导意见

Guidance on Regulating Titles for Cases Involving the Declaration of Concentrations of Undertakings (Translation into English not available from the SAMR)

关于经营者集中简易案件适用标准的暂行规定

Interim Provisions on Standards Applicable to Simple Cases regarding Concentration of Undertakings (Translation into English not available from the SAMR)

关于经营者集中简易案件申报的指导意见

Guidance on the Declaration for Summary Cases Involving Concentrations of Undertakings (Translation into English not available from the SAMR)

经营者集中简易案件反垄断审查申请表

Antitrust Notification Form for Simple Cases of Concentration of Undertakings (Translation into English not available from the SAMR)

经营者集中简易案件公示表

Public Disclosure Form For Simple Cases of Concentration of Undertakings (Translation into English not available from the SAMR)

经营者集中附加限制性条件的规定(试行)

Rules for Imposing Restrictive Conditions on the Concentration of Undertakings (for Trial Implementation) (Translation into English not available from the SAMR)

关于评估经营者集中竞争影响的暂行规定

Interim Provisions on Assessment of Impact of Concentration of Undertakings on Competition (Translation into English not available from the SAMR)

未依法申报经营者集中调查处理暂行办法

Provisional Measures on Investigation and Punishments on Undertakings that Failed to Declare the Concentration of Undertakings as Required by Law (Translation into English not available from the SAMR)

关于经营者集中申报的指导意见

Guiding Opinions for the Declaration of Concentration of Undertakings (Translation into English not available from the SAMR)

经营者集中反垄断审查办事指南

Anti-monopoly Review Guides for Concentrations of Undertakings (Translation into English not available from the SAMR)

关于施行《经营者集中反垄断审查申报表》的说明

Explanation on the Implementation of the Declaration Form for Anti-monopoly Review of Concentrations of Undertakings (Translation into English not available from the SAMR)

4) Does general competition regulation apply to mergers or ancillary restrictions?

Generally, restrictions of competition that are ancillary to the merger, for instance a non-competition obligation on the mergingparties, are considered inherent parts of the merger and are not subject to separate scrutiny under the general competition regulation. However, restrictions that go beyond what may be considered ancillary may cause a separate investigation against the restrictions in the transaction agreements.

5) May an authority order a split-up of a business irrespective of a merger?

No.

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

SAMR is the only authority who is in charge of merger filing. However, transactions in relation to certain industries are subject to other review procedures by other government agencies:

Approval from the State-owned Assets Supervision and Administration Commission

If the subject assets or equity in a merger transaction is state owned, transfer of the assets or equity must get approval from the State-owned Assets Supervision and Administration Commission concerned.

Special Administrative Measures (Negative List) for Admission of Foreign Investment

The National Development and Reform Commission and the Ministry of Commerce jointly promulgate a Negative List every year. The Negative list specifies certain fields that Foreign investors are prohibited from investing in. Non-prohibited fields covered in the Negative List are subject to licensing for admission of foreign investment. Furthermore, the Negative list specifies certain fields subject to equity ratio requirement, restricting investments by foreign-funded partnership enterprises.

7) Are any parts of the territory exempted or covered by particular regulation?

The AML only covers Chinese Mainland and not Hong Kong, Macao and Taiwan. Hong Kong and Taiwan each have their own separate competition regulations. 

Voluntary or mandatory filing

8) Is merger filing mandatory or voluntary?

Merger filing is mandatory, provided the thresholds are met.

Types of transactions to file – what constitutes a merger

9) Is there a general definition of transactions subject to merger control?

Yes, according to the AML, a the following transactions may be subject to merger control:

  1. merger of undertakings;
  2. acquisition of the controlling stake in other undertakings by an undertaking through acquisition of equity or assets;
  3. acquisition of the controlling stake in other undertakings by way of contracting or decisive influence by an undertaking over other undertakings.

Note that certain transactions under exemption conditions are not subject to merger control (see topics 19 and 20).

10) Is "change of control" of a business required?

Yes, generally a merger will only be considered to take place if the transaction results in a change of control over a business.

However, transactions that result in the establishment of a joint venture jointly controlled by two or more businesses might also constitute a merger.

11) How is “control” defined?

“Control” under Chinese merger rules includes sole control and joint control.

Whether an undertaking obtains control over other undertakings or is able to exercise decisive influence over other undertakings through transactions (control and decisive influence hereinafter collectively known as "Control") depends on a number of legal and factual factors. The merger agreement and the articles of association of the target undertaking are important basis for determining control, but not the only one. If it is not possible to determine from the merger agreement and articles of association whether the control is obtained, control may be deemed to exist on the basis of share diversification, i.e. for instance because a big minority shareholding de facto allows a shareholder to exercise control because the remaining shares are spread on a high number of independent shareholders.  

To determine whether an undertaking has obtained the control over other undertakings, usually a number of factors shall be taken into account, including but not limited to:

  1. The purpose of the transaction and future plans;
  2. The shareholding structure of the target and the changes to that structure;
  3. Reserved matters and voting mechanism of the shareholders' meeting of the target and its historical attendance rate and voting record;
  4. The composition and voting mechanism of the board of directors and board of supervisors of the target;
  5. The right to appoint and dismiss senior management of the target;
  6. The relationship between the shareholders and directors of the target, including whether there is any proxy voting arrangement or persons acting in concert; and
  7. The existence of any material business relationship or cooperation agreement between the acquirer and the target.

Control may be directly obtained by the undertaking, or indirectly obtained through undertakings under its control.

12) Acquisition of a minority interest

Acquisition of a minority interest that does not result in anyone gaining control over a business is not subject to merger control.

However, if acquisition of a minority interest confers merging parties with “decisive” control of a business, the transaction will be subject to merger control. This is, for instance, the case if the buyer is provided with veto rights regarding decisions that are essential for the strategic behavior of the business or if the remaining shares are spread over a large number of shareholders and the acquired shares de facto confer the buyer with a decisive influence on general meetings.

13) Joint ventures/joint control – which transactions constitute mergers?

The following transactions regarding businesses subject to joint control may be subject to merger control:

  1. Establishment of a joint venture;
  2. Change from sole control of an enterprise to joint control;
  3. Change of one or more of the parents having joint control;

Chinese rules do not distinguish between full-function and non-full function joint ventures, both of which are subject to filing if the threshold are met. 

Thresholds that decide whether a merger notification must be filed

14) Which thresholds decide whether a merger notification must be filed?

a) Turnover thresholds

A merger notification must be filed if:

  1. During the previous fiscal year, the total global turnover of all merging parties exceeded RMB 10 billion, and at least two of these parties each had a turnover of more than RMB 400 million within China; or
  2. During the previous fiscal year, the total turnover within China of all the merging parties exceeded RMB 2 billion, and at least two of these parties each had a turnover of more than RMB 400 million within China.

b) Market share thresholds

N/A

c) Value of transaction thresholds

N/A

d) Assets requirements

N/A

e) Other

Where merging parties do not reach the general threshold of notification, but the facts and evidence collected indicate that the merger has or may have effect of eliminating or restricting competition, the SAMR shall conduct investigations in accordance with the law. In this situation, the merging parties must file a merger notification upon a request from the SAMR. However, this rarely happens in practice. 

15) Special thresholds for particular businesses

The thresholds stated in topic 14 apply to all transactions except for banking, insurance, securities, futures and other special financial industries and sectors, where the calculation of turnover shall take into consideration the actual circumstances (see topics 17).

16) Rules on calculation and geographical allocation of turnover

Turnover includes revenues received by relevant undertakings from selling products and providing services in the last fiscal year, with relevant taxes and surcharges deducted.

“Chinese turnover” refers to an undertaking’s sales of products or services to customers within the territory of China, including exports to China from other nations or regions, but excluding the products or services exported from China to other nations or regions.

“Global turnover” includes the turnover generated within the territory of China.

The turnover of an individual merging party shall include the total turnover of any direct or indirect parent companies, subsidiaries, joint ventures and subsidiaries of parent companies. Turnover between such businesses (intra group turnover) must be deducted. Thus, the principle is that the turnover of any entity under the umbrella of control shall only be counted once, and related transaction between this entity with its related company shall be excluded when calculating the group’s turnover. 

The turnover that businesses under joint control have with third parties must be allocated equally between the controlling parties. 

If a merging party is jointly controlled by two or more parties, its turnover shall include that of all the controlling parties. The turnover of the seller is irrelevant, unless the seller retains a controlling interest in the target. 

The turnover of the target shall not include turnover of any parts of seller’s business not involved in the merger. 

17) Special rules on calculation of turnover for particular businesses

Turnover calculation for undertakings in the financial sector is subject to a special regulation, “Measures for the Computation of Turnover for Declaration of the Concentration of Undertakings in the Financial Sector”. 

The undertakings comprised by the special regulation include financial institutions in the banking industry, securities companies, futures companies, fund management companies and insurance companies, etc. 

The provisions for financial institutions in the banking industry also apply to financial assets management companies, trust companies, finance companies, financial leasing companies, auto financial companies, money brokerage companies and other financial institutions established with approval by the banking regulatory authorities.

The general formula for turnover calculation is:

Turnover = (Aggregate of elements of turnover – business tax and surcharge) * 10%

For financial institutions in the banking industry, the elements of turnover include:

  1. Net income from interest;
  2. Net income from handling fees and commissions;
  3. Investment income;
  4. Gains from changes in fair value;
  5. Exchange gain; and 
  6. Income from other businesses.

For securities companies, the elements of turnover include:

  1. Net income from handling fees and commissions;
  2. Net income from interest;
  3. Investment income;
  4. Exchange gain; and
  5. Income from other business.

For futures companies, the elements of turnover include:

  1. Net income from handling fees and commissions; and 
  2. Net income from interest of bank deposits.

For fund management companies, the elements of turnover include:

  1. Income from management fees; and 
  2. Income from handling fees.

The following specific formula applies for calculation of turnover of insurance companies:

Turnover = (Income from insurance premiums - business tax and surcharge) × 10%

Income from insurance premiums = income from insurance premiums of original insurance contracts + ceded-in insurance premiums - ceded-out insurance premiums.

18) Series of transactions that must be treated as one transaction

Interdependent mergers between the same undertakings within a two-year period that do not separately trigger the turnover threshold shall be treated as one transaction. 

The interdependent merger is deemed to take place at the time of occurrence of the last merger transaction and the turnover of the mergers is aggregated for the purpose of the turnover calculation.

This rule also applies to mergers carried out by an undertaking through other undertakings which are controlled by or control it.

Exempted transactions and industries (no merger control even if thresholds ARE met)

19) Temporary change of control

There is no exemption for “temporary change of control”. 

20) Special industries, owners or types of transactions

There is no exemption for merger transactions in relation to special industries, owners or types under Chinese merger control rules.

21) Transactions involving only foreign businesses (foreign-to-foreign)

There is no exemption for foreign-to-foreign transactions, but there is a simplified procedure available if the parties in the transaction do not have business and assets in Chinese mainland.

22) No overlap of activities of the parties

There is no exemption for transactions with no overlap of activities under Chinese merger control rules.

23) Other exemptions from notification duty even if thresholds ARE met?

N/A

Merger control even if thresholds are NOT met

24) May a merging party file voluntarily even if the thresholds are not exceeded?

Yes. Where a merger does not meet the thresholds, but the undertakings voluntarily make a notification, the SAMR shall accept and review the case and make decisions according to the AML if it deems necessary for case acceptance after receipt of notification documents and materials.

During the period of notification and review procedure, the merging parties may determine, at their sole discretion, whether to suspend their transactions, but they will bear the corresponding consequences in case the merger is not approved unconditionally.

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

Where a merger does not reach the general threshold of notification, but the facts and evidence indicate that the merger has or may have effect of eliminating or restricting competition, the SAMR shall conduct investigations in accordance with the law and may prohibit the transaction or subject it to conditions.

Referral to and from other authorities

26) Referral within the jurisdiction

SAMR is the only competent authority which is entitled to accept and review the merger filing in accordance to AML and auxiliary merger control rules. 

27) Referral from another jurisdiction

SAMR cannot handle a merger filing based on referrals from other jurisdictions.

28) Referral to another jurisdiction

SAMR cannot refer a merger filing to another jurisdiction.

29) May the merging parties request or oppose a referral decision?

No.

Filing requirements and fees

30) Stage of transaction when notification must be filed

A merger notification must be filed when a binding agreement has been concluded. A published acquisition report of a takeover bid can be deemed as a binding agreement. There is no specific deadline, but the transaction cannot be implemented before the merger has been approved by SAMR. SAMR will not accept notification materials before a binding agreement has been concluded.

31) Pre-notification consultations

The merging parties can apply for a pre-notification consultation meeting with SAMR, which will give guiding opinions on the issues it may have concerns about based on the information provided by the pre-notification consultation applicant.

A pre-notification consultation is not a mandatory process. The merging parties can decide at their own discretion whether to apply for a pre-notification consultation meeting.

The application for a pre-notification consultation meeting shall be submitted in writing, either by fax or by courier to SAMR.

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

A merger that is a consequence of acquisition of securities on a stock exchange or a public takeover bid must be notified after the publication of the takeover bid. 

Where a listed company is acquired by way of an open offer, the published report of acquisition by offer may be regarded as a signed binding agreement. Since the merger transaction is not allowed to be implemented before approval by the SAMR, the acquirer is prevented either from closing the deal or from exercising its rights as a shareholder.

33) Forms available for completing a notification

There are two forms available: one for simplified notification and one for full notification. Both can be found on the website of SAMR (see links under topic 3).

Simplified notification is possible if:

  1. On all affected relevant markets, the sum of market shares taken up by all undertakings participating in the concentration is less than 15%;
  2. The market share taken by all merging parties that have an upstream-downstream relationship is less than 25% on both the upstream and downstream markets; and
  3. The market share taken by the merging parties that are not on the same relevant market and have no upstream-downstream relationship between them, is less than 25% shares on each market related to the merger.

Simplified notification is also possible in each of the following cases:

  1. The merging parties establish a joint venture outside China which does not conduct business activities inside China;
  2. The merging parties purchase equity or assets of an enterprise outside China which does not conduct business activities inside China; or
  3. buy-out by one or more existing JV shareholder(s) of other existing JV shareholder(s), except where the sole controller competes with the joint venture in the same relevant market.

34) Languages that may be applied in notifications and communication

In Chinese only. All notification documents and materials are required to be presented in Chinese or with Chinese translation.

35) Documents that must be supplied with notification

The following documents should always be supplied with a merger notification whether simplified or full:

  1. Legalized and notarized certificate of incorporation;
  2. Original copy of a POA;
  3. Shareholding structure chart;
  4. Audited financial statements for the previous fiscal year;
  5. Annual report of the previous fiscal year;
  6. Research analysis and report made by the undertakings or by third parties;
  7. Transaction agreement, including subscription agreement, joint venture agreement etc.;
  8. Shareholding Structure Charts before and after the Transaction;
  9. Market shares and analysis regarding the affected relevant markets;
  10. Contact information of major competitors;
  11. Notification information in other jurisdictions;
  12. Statement made by the parties confirming that the deal and parties involved comply with applicable law and regulations of China besides for AML; and
  13. Non-confidential version of the notification (to be supplied to third parties) and a public disclosure form for simplified notification.

36) Filing fees

There is no charge for merger filing in China.

Implementation of merger before approval – “gun jumping” and “carve out”

37) Is implementation of the merger before approval prohibited?

Yes. The merging businesses must be run separately and independently until the merger has been approved. 

38) May the parties get permission to implement before approval?

No. Article 25 of AML expressly stipulates that before a decision made by SAMR, the merging parties shall not implement the merger. There is no exemption for merger implementation before approval. 

39) Due diligence and other preparatory steps

There are no specific rules or guidelines under Chinese merger control rules on to what extent due diligence and preparatory steps are allowed before approval. Generally speaking, preparatory steps are not allowed before approval of the merger. 

However, the merging parties may voluntarily prepare and provide documents and materials that can help SAMR review and make decisions on the merger, such as opinions of the local government and competent authorities, and various reports supporting the merger agreement, including feasibility study report of the merger transaction, due diligence report, industry development research report, merger plan report, and post-transaction forecast report.

40) Veto rights before closing and "Ordinary course of business" clauses

There are no specific rules or guidelines in this regard. Generally speaking, veto rights before closing and “Ordinary course of business” clauses are not acceptable under Chinese merger control regime.

41) Implementation outside the jurisdiction before approval – "Carve out"

There are no specific rules or guidelines on “carve out” of the Chinese part of a transaction to avoid delaying implementation in the rest of the world pending approval in China.

42) Consequences of implementing without approval/permission

According to the AML, where the merger parties implement the merger without approval, SAMR can order the merging parties to stop implementing merger, to dispose of the shares or assets within a stipulated period or to transfer the business within a stipulated period and to adopt other necessary measures to reinstate the pre-merger status; a fine of not more than RMB 500,000 can be imposed. But the it is under discussion by legislators to increase the fines on failure to make filings. 

The process – phases and deadlines

43) Phases and deadlines

Phase

Duration/deadline

Pre-notification phase:

The only formal requirement concerning deadline in the pre-notification phase is that the merger cannot be implemented before the merger fling. 

Before making a formal notification, merging parties can apply for consultation with SAMR in respect of issues relating to the notification. The application for consultation shall be made in writing. 

No fixed duration or deadline

Assessment of completeness of notification:

When the merger notification has been formally submitted, SAMR must assess whether the notification is complete. There are no specific rules as to time limit for the assessment. Having said that, SAMR usually will give the first round of feedback about the completeness of the notification, normally in the form of supplementary questionnaire, to the undertakings within 1-2 weeks.

In the supplementary questionnaire, it always indicates a specific deadline for submission of the supplementary information and documents (usually in 1 week). If the merging parties fail to supplement the materials as required, SAMR can instruct the merging parties withdraw the notification.

As regards simplified notification, if SAMR believes a simplified notification does not meet the relevant criteria, merging parties shall withdraw the simplified notification and re-file as a full notification.

An extension is possible and it mainly depends on communication with the case handler and workload of the supplement. 

The notification will be accepted by SAMR as soon as it is satisfied with the completeness of the materials.

No specific rules. The first round of feedback will be given to the undertakings within 1-2 weeks.

Usually SAMR will give 1 week for the undertakings to prepare and provide the supplementary materials.

In practice, it may take months for SAMR to formally accept a notification.

Phase I:

The merger is either approved (with commitments if relevant) or it is decided to initiate a phase II investigation of the merger.

Simplified Notification:

Once a simplified notification is accepted, the corresponding disclosure form will be published on the website of SAMR. The public has 10 days to make comments on the notification from the date of the announcement. 

If there are no opposing comments from SAMR and the public during the publicity period, the simplified notification will be cleared very quickly. Otherwise, SAMR will decide to make further review of the merger transaction.

Full Notification:

SAMR will, within 30 days from the date of case acceptance, finish its preliminary review and make a decision on whether the merger filing is subject to a further review (phase II).

Simplified Notification:

10 days for public comments from the date of announcement of the case on SAMR’s website. If there are no opposing comments from SAMR and the public, the case will usually be cleared within 30 days.

Full Notification:

30 days from the date of case acceptance. 

Phase II:

The merger is either approved, approved with conditions/commitments or prohibited.

The phase II is supposed to be completed within 90 days from the date of the further review decision made in Phase I. 

If the merging parties agree to extend the review period, the documents and materials submitted are inaccurate and need to be further verified, or a substantial change happens to the merging parties after the notification, SAMR can decide to extend the review period for no longer than 60 days. 

90 working days from the date of further review decision made in Phase I.

Extension:

No longer than 60 days.

Assessment and remedies/decisions

44) Tests or criteria applied when a merger is assessed

It is assessed whether the merger will "significantly impede effective competition – in particular due to the creation or strengthening of a dominant position".

The following factors shall be taken into consideration:

  1. the market share of the merging parties in the relevant market and their control over the market;
  2. the market concentration in the relevant market;
  3. the impact of the merger on market entry and technological advancement;
  4. the impact of the merger on consumers and other relevant business operators;
  5. the impact of the merger on the development of national economy; and
  6. other factors which have an impact on market competition to be taken into consideration by SAMR. 

45) May any non-competition issues be considered?

Yes. According to AML, a merger transaction shall be subject to national security review if the merger involves acquisition of domestic enterprises by foreign-funded undertakings or any other methods which may affect national security. 

In addition, the impact of the merger to public interests may also be considered by SAMR.

46) Special tests or criteria applicable for joint ventures

The assessment for joint ventures is the same as for other mergers.

47) Decisions and remedies/commitments available

A merger may be approved, approved with conditions/commitments or prohibited.

If SAMR and/or relevant domestic industry in China expresses serious concerns about the merger, it is important that the parties enter into negotiations of possible commitments well before the expiry of the deadlines, as the SAMR will normally only consider an approval with conditions if the parties have offered commitments.

Commitments can be either structural or behavioral and with or without time limitations.

SAMR may revoke an approval if at any time it becomes aware that incorrect or misleading information has been provided by the parties or if the parties do not comply with the conditions/commitments contained in the approval.

SAMR can also make a decision on prohibition. However, prohibition cases are very rare in China.

Publicity and access to the file

48) How and when will details about the merger be published?

SAMR will make a public announcement when the decision of a merger filing has been made. If the decision is an approval with conditions, the conditions and commitments made by the parties shall be published along with the decision.

In case of simplified notifications, a disclosure form for the merger transaction submitted by the parties will be published on SAMR’s website for public comments.

However, the non-confidential version of a notification will not be published to the public and will be only sent to some particular third parties for comments, such as relevant industry associations. 

49) Access to the file for the merging parties and third parties

The merging parties:

Beside the notification materials submitted, the merging parties are not able to access any files provided from third parties unless the SAMR believes access is necessary. For example, SAMR may forward comments or arguments received from the public to the merging parties and request the merger parties to respond to such comments and arguments. Usually, the identity of the third party will be redacted as confidential information.

Third parties:

Beside the notification materials submitted, the merging parties are not able to access any files provided from third parties unless the SAMR believes access is necessary. For example, SAMR may forward comments or arguments received from the public to the merging parties and request the merger parties to respond to such comments and arguments. Usually, the identity of the third party will be redacted as confidential information.

Judicial review

50) Who can appeal and what may be appealed?

In theory, any interested parties, such as the merging parties and other undertakings involved in the relevant market and upstream/downstream industries which are negatively affected by the decision may appeal the decision. 

The appeal can be divided into administrative review and an administrative lawsuit. Administrative review is initiated by complaint to the legal department of SAMR, whereas administrative lawsuits may be lodged with the First Middle Court in Beijing. Importantly, the administrative lawsuit shall not be initiated unless parties have gone through the procedure of administrative review. But, in practice, both levels of appeal are rare.  


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